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Market movements and politics influencing investor’s decision
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Market movements and politics influencing investor’s decision

Stock markets in India have traded the week on a lacklustre note, bordering on the negative. An uptick in inflation rates in an environment of stable and slowing growth made investor cautious and discouraged them from taking high long exposure to the markets. However, markets did see a little bit of relief during the week, following an overnight slump in crude oil prices. The slide in global crude oil prices could help India contain inflation, current account and fiscal deficits. India imports about 80% of its crude oil requirement. Brent for September, 2018 had fallen $3.49 a barrel, or 4.63% to settle at $71.84 a barrel during the week, in global commodity markets. Investors adopted a note of caution ahead of the opposition parties no-confidence motion against Prime Minister Narendra Modi's government.

INFLATION CONTINUES TO BE A CONCERN

The annual rate of inflation based on monthly WPI, stood at 5.77% (provisional) for June, 2018 as against a print of 4.43% (provisional) in the previous month and 0.90% in June, 2017. Build up in inflation rate this financial year so far has been 2.49% compared to a build-up rate of -0.44%, in the corresponding period of the previous year. A higher inflation rate in a flat to slowing growth environment can be detrimental for the economy.

GROWTH CONTINUES TO FACE HEADWINDS

Adding to domestic growth concerns, the IMF has cut India's growth forecast by 10 basis points to 7.3% for the current year and by 30 basis points to 7.5% for 2019, citing faster-than-anticipated monetary tightening and higher crude prices. The international body had projected 7.4% and 7.8% growth for 2018 and 2019, respectively in its April, 2018 forecast.

POLITICS TO THE FORE

On the political front, the Lok Sabha debated on Friday July 20, 2018 a no-confidence motion against Prime Minister Narendra Modi's government moved by the opposition. The government has said it is confident of its numbers and that it was looking forward to a debate in which it can showcase its achievements during the first no-trust vote on the floor of Parliament in 15 years.

INSTITUTIONAL ACTIVITY

Foreign institutional investors (FIIs) continue to influence market flow and activity. FIIs have net sold Indian equities worth INR 1519.68 crore since July 16, 2018. Domestic institutional investors continue to be net buyers and have net bought Indian equities worth INR 1350.79 crore, in the same time period.

Source:

www.nseindia.com

Bloomberg.com

Disclaimers: The material contained herein has been obtained from publicly available information, internally developed data and other sources believed to be reliable, but BNP Paribas Asset Management India Private Limited (BNPPAMIPL) makes no representation that it is accurate or complete. BNPPAMIPL has no obligation to tell the recipient when opinions or information given herein change. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. This information is meant for general reading purpose only and is not meant to serve as a professional guide for the readers. Except for the historical information contained herein, statements in this publication, which contain words or phrases such as 'will', 'would', etc., and similar expressions or variations of such expressions may constitute 'forward-looking statements'. These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. BNPPAMIPL undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof. The words like believe/belief are independent perception of the Fund Manager and do not construe as opinion or advise. This information is not intended to be an offer to sell or a solicitation for the purchase or sale of any financial product or instrument. The information should not be construed as an investment advice and investors are requested to consult their investment advisor and arrive at an informed investment decision before making any investments. The Trustee, Asset Management Company, Mutual Fund, their directors, officers or their employees shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages arising out of the information contained in this document.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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